Labor has been under fire for weeks over the appointment of former corporate affairs executive and Labor staffer Josh Murray to lead the country's largest transport department.
Documents provided to parliament this month showed Transport Minister Jo Haylen's office requested Mr Murray be interviewed for the role after recruiters declined to shortlist him.
He later made a final shortlist.
Ms Haylen has said a $125,000 recruitment process was run to assure herself Mr Murray was the best person she could appoint to head the key agency.
In retrospect, the money was not required, Premier Chris Minns said on Monday.
"Given that Mr Murray was appointed to the job, obviously, we want to make sure that we don't spend that money when we don't need to," he told Sydney radio 2GB.
"In retrospect, it wasn't required.
"If you know who you want for the position, we want to make sure that we're in a position where we can appoint those senior public servants for those difficult jobs."
Opposition transport spokeswoman Natalie Ward said the comments were an admission the process to appoint Mr Murray "was a sham".
She has led the coalition's cries of "jobs for the boys", pointing to the incoming transport tsar's Labor connections.
Mr Murray served as chief of staff in the Iemma government before climbing the corporate affairs ladder at infrastructure giant Laing O'Rourke.
But the government has dismissed suggestions of wrongdoing and pointed out overseeing Transport for NSW's $26 billion annual budget is far from a cushy position, unlike in other recent "jobs for the boys" scandals.
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